Phase 2 Digital Asset Act Pushed, Will Spot Bitcoin ETF be Approved in Korea?

Expectations for institutionalizing the virtual asset market are reaching a peak as the government officially announced the introduction of a domestic spot Bitcoin ETF in connection with the Phase 2 legislation of the Digital Asset Basic Act in the second half of the year. Attention is focused on whether institutional capital inflows will begin in earnest through the institutionalization of stablecoins and the revision of the Capital Markets Act.

Phase 2 Virtual Asset Legislation Accelerates Industry Promotion and Institutionalization

Following the enforcement of the Virtual Asset User Protection Act in 2024, the government is entering the next phase of industry promotion by enacting the Digital Asset Basic Act in the second half of the year. The core elements are the segmentation of the digital asset industry and the institutionalization of KRW-pegged stablecoins. This is interpreted as a preemptive measure to defend monetary sovereignty and establish a foreign exchange management system amidst the proliferation of global currency-based stablecoins. If the bill is passed, business conduct regulations will be clarified, enabling legitimate business expansion for blockchain companies.

Spot Bitcoin ETF: Revision of the Capital Markets Act is Key

The introduction of the spot Bitcoin ETF, the market's biggest interest, is also expected to materialize with this Phase 2 legislation. Under the current Capital Markets Act, virtual assets are not recognized as underlying assets for ETFs, making domestic issuance and investment impossible. The government plans to expand the scope of underlying assets by revising the Capital Markets Act, creating an environment where domestic investors can safely invest in spot Bitcoin through their securities accounts. This is analyzed as an intention to increase market transparency and expand opportunities for institutional investors, drawing on examples from major countries like the US and Hong Kong.

Frequently Asked Questions (FAQ) Regarding Spot Bitcoin ETFs

• Q. What are the benefits if a spot Bitcoin ETF is approved?
  A. Investors will be able to safely and conveniently invest in Bitcoin just like stocks through familiar securities accounts, without having to go through existing virtual asset exchanges. Furthermore, large-scale institutional capital inflows could help mitigate market volatility.
• Q. When is the bill expected to be passed?
  A. The government aims to pass the legislation within the second half of this year, but this may change depending on political schedules, such as coordinating differences between ministries regarding stablecoin issuers and the National Assembly's National Policy Committee review.